Making Cents: Plan now to avoid family disharmony

Wednesday

You don't need to be from a billion-dollar family for your family to be fighting about financial issues. It happens to families with limited means, to middle-income families and affluent families.

A common goal for most parents and grandparents is family harmony. They hope the family will stay close beyond their lifetimes and for generations to come. Unfortunately, these dreams often fail to come true through a combination of naivety, poor planning and weak communication. You don't need to be from a billion-dollar family for your family to be fighting about financial issues. It happens to families with limited means, to middle-income families and affluent families.

Some of the most common causes of family disharmony start with the aging of a grandparent. As he or she needs care, it is commonly one of the children, and frequently a daughter, that provides that care. After an extended period of daily care, it is common for the caregiver to begin resenting the other siblings who have not given up their job or neglected their own family to care for mom. If you can qualify for and afford the coverage, adequate long-term care insurance will allow the family to hire professional care, and allow the offspring to maintain some normalcy to their day-to-day life. Another alternative may be to pay the caregiver through a will or outright cash compensation at the time of providing the care.

Another cause of family disharmony comes from family businesses. It is not common to have all of your children working in the family business. Some have gone on to unrelated careers and may have even relocated to other parts of the country. In these cases, it makes sense to somehow equalize your estate to recognize that family is one thing and the business is quite another. It may not be fair to have your son in California inherit half of a business that your daughter will run in Massachusetts after your passing.

A poor will or trust can also cause heartache after your demise. This can happen from unclear instructions regarding personal property, where one heir picks what they want before the others even get a chance to see what mom or dad still had. It can also happen by allowing children to get too much before they are mature enough to handle the newfound wealth.

If family harmony is your goal, don't think that your parenting skills alone will do the trick. It's important to communicate your intentions and objectives during your lifetime and clearly through your wills and trusts. And remember, things change. Health, wealth and your children's needs and family harmony may be different in 20 years than they are today.

John P. Napolitano is the CEO of U.S. Wealth Management in Braintree, Mass. He may be reached at jnap@uswealthcompanies.com.

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